WASHINGTON (AFP) — China is failing to live up to its World Trade Organization commitments, the US trade chief told Congress Tuesday, as the two economic powers meet in China to discuss strained trade relations.
In an annual report to Congress, US Trade Representative (USTR) Susan Schwab cited "China's shortcomings in observing basic obligations of WTO membership as well as Chinese policies and practices that undermine previously implemented commitments."
The report came as the administration of President George W. Bush is under increasing pressure to get tougher with China over its ballooning trade surplus, which hit 23.8 billion dollars in September, up 5.5 percent from August, according to the latest US figures.
Critics say Beijing does not play by WTO rules and maintains its yuan currency undervalued against the dollar to give its exports an unfair trade advantage. Several bills have been proposed in Congress aimed at better protecting US trade interests and punishing China.
The USTR report coincided with an annual one-day US-China trade meeting on specific issues, held in Beijing, at which China said constant US criticism over trade disputes was hurting economics ties. The twice-yearly US-China Strategic Economic Dialogue, meant to address broad trade issues, opens Wednesday.
Schwab's office said in its "2007 Report to Congress on China's WTO Compliance" that Washington had "intensified its frank bilateral engagement with China" this year and had taken disputes to the WTO where dialogue had failed.
"The focus of this bilateral and multilateral engagement included significant market impediments and trade-distortive practices as well as other Chinese government policies and practices where the United States has needed to respond in order to defend fundamental WTO principles," said the report, issued on the sixth anniversary of China's accession to the international trade regulator.
The USTR pointed to the successful resolution of one of the three WTO complaints the US brought against China this year, when China in November agreed to eliminate all of its WTO-prohibited subsidies being challenged by the United States, along with Mexico.
But despite China's "many impressive steps to reform its economy," Schwab said: "More still needs to be done."
The report examined WTO commitments made by China and includes testimony by US industry.
It cited one major trade association's testimony before the USTR, which expressed growing concern about China's commitment to the principles it adopted when it joined the WTO on December 11, 2001.
"At the root of many of these problems is China's continued pursuit of problematic industrial policies that rely on excessive Chinese government intervention in the market through an array of trade-distorting measures," the USTR report said.
China's progress toward adopting economic reforms to ease its transition toward a market economy began to slow in early 2006 amid differences between China's central, provincial and local governments, it said.
"China's difficulties in generating a commitment to the rule of law have exacerbated this situation."
Chinese Vice Premier Wu Yi criticized US complaints Tuesday at opening of the annual meeting of the Joint Commission on Commerce and Trade, held to discuss specific trade-related issues. Schwab and US Commerce Secretary Carlos Gutierrez led the US delegation.
"There have been some disharmonious notes in China-US relations this year. The inclination to politicize (trade) issues has increased," Wu said.
"Trade restrictions, and protectionist measures, can only hurt both sides."
Treasury Secretary Henry Paulson leads the US delegation at the US-China Strategic Economic Dialogue, a twice-yearly meeting meant to address broad trade issues that opens Wednesday.
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